Tonight, it looks like Netflix is singing the after-hours blues. At the time of this writing, the company’s stock has plummeted more than 28 points in after hours trading, a 10 percent overall drop. While Netflix posted another strong quarter this afternoon, with net income up to $68 million, a 55 percent year-over-year increase and $788.6 million in revenue, up 52 percent year-to-year, there were some caveats. As my colleague Erick Schonfeld wrote earlier this afternoon, “Wall Street still isn’t happy with the slowdown in store for the third quarter”. And why is that?
Netflix’s much-talked-about price change goes into effect in the third quarter, and should be fully rolled out, Netflix estimates, by September 15th. As a result, Netflix expects “domestic net additions in Q3 to be lower than the previous year’s Q3, and because of the timing of the price change, revenues will only grow slightly on a sequential basis”. That means: Investors, temper your expectations for the next few months. (Or, as we’ve seen from this afternoon’s activity, “sell it like it’s stolen”.) → Read More
In its first quarterly earnings since it announced plans to hike prices for DVD subscribers who also stream videos, Netflix tried to put the best face on its new decision. In a shareholder letter (PDF) accompanying earnings, CEO Reed Hastings and CFO David Wells report that during “the quarter, the streaming only plan continued to gain in popularity, with nearly 75% of our new
subscribers signing up for it.”
Nevertheless, net domestic subscribers increased by only 1.8 million versus 3.8 million new subscribers last quarter. (Netflix now has a total of 24.6 million subscribers in the U.S. and about another 1 million abroad). The big impact of the price change, of course, will come next quarter, when the company expects total subscribers to stay at around 25 million, with 22 million getting streaming video in some fashion, 15 million still getting DVDs, and a overlap of about 12 million getting both.
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It’s been pretty fascinating to watch Netflix’s growth from a company that Blockbuster laughed at in 2000 (when Founder and CEO Reed Hastings and former CFO Barry McCarthy proposed to Blockbuster management that they run its online brand) to the single largest source of web traffic in North America in 2011.
There have been quite a few hiccups and ups and downs along the way, as the on-demand video provider has struggled with Hollywood studios, succeeded as leadership has pushed its service onto TVs, game systems, and mobile devices — and more recently, re-focused on its streaming business. → Read More
I like this trend. The Lenovo IdeaPad K1 is the latest non-iPad tablet to find deep discounts as soon as it’s announced. Similar cuts were made to the TouchPad and other Honeycomb tablets shortly after launch.
This affilate deal comes by way of LogicBuy.com who is offering a clean $100 off the MSRP of the just-announced 64GB Lenovo K1 tablet. That brings the 64GB flavor down to the price of the 32GB model. Both models of course stream Netflix and have all the goodies normally associated with Android 3.x. → Read More
Talk about backlash. I’ve yet to see one comment anywhere supporting Netflix’s price hikes and for good reason. Netflix announced a new pricing scheme yesterday that effectively raised the price of a popular subscription plan by 60%. Instead of costing $9.99 for streaming and DVD rental, Netflix separated the services and priced them each $7.99, which results in a combined cost of $16.
But it’s not the $6 people are ranting about. Most of us would spend half of that amount on one silly coffee drink every day if we weren’t lactose intolerant. It’s that Netflix raised the prices without adding any value. There simply isn’t any way of spinning this as a benefit to the consumer and backlash is the result. → Read More
Netflix is officially on an all-out assault on the DVD — or so says their just-released pricing strategy. The new prices yell loud and clear that streaming is the future and you’re going to pay (literally) if you don’t hop on the bandwagon. Maybe this is why Reed Hastings stated back in May that DVD shipments might go down for the first time ever.
Gone are the plans that include streaming and DVD. Customers previously had the option of selecting the streaming plan for $7.99 and then paying an additional $2 to be able to rent one DVD at a time. Now the plans are separate with the streaming plan costing $7.99 and the DVD plan at $7.99; selecting both options for $16 results in a 60% price increase. Current subscribers will be able to ride the lower price until September 1st, but the plan just went live for new customers. Ouch. → Read More
Once upon a time, buying a high-end audio or video device often meant sacrificing otherwise standard consumer features. Instead of a quality remote, you’d get fancy interior audio circuity. Instead of an on-screen GUI, the player would weigh 30 lbs. Such was the life of a fine media connoisseur. That trend is quickly fading, though. Onkyo just announced its latest flagship Blu-ray player: the $599 BD-SP809. This bad boy comes complete with 3D capabilities and a fancy-pants THX Blu-ray certification. It packs a USB port for media playback and an Ethernet port for local DLNA 1.5 support and online streaming services such as Netflix, Blockbuster, Film Fresh, and VUDU. Got to love that. → Read More
A new study by Yahoo (embedded below) shows that online video watching habits are shifting. People are watching longer videos and watching more at night during primetime. The chart above shows when people watch videos online. The blue line is today (2011) and the dotted line is two years ago (2009). The two lines show more than a 30 percent divergence during primetime.
So what changed? Peak online video viewing today is during prime time, between 6 PM and 9 PM. Only two years ago, prime time showed the biggest dip in online video viewing as people turned off their computers and turned on their TVs. But now, more people are streaming TV shows and movies from services like Netflix and Hulu, and they tend to watch those videos during the same time period they previously watched regular TV. While people may not yet be cord cutting, this data suggests that online watching does encroach upon regular cable and satellite TV watching. → Read More
Facebook has just named Netflix co-founder and CEO Reed Hastings to its board. We’ve pasted the release below.
Hastings co-founded Netflix in 1997 with then CEO Marc Randolph and launched the movie subscription service in 1999. Prior to that, Hastings founded Pure Atria Software, where he was CEO until the company was acquired by Rational Software Corporation in 1997. Hastings also serves on Microsoft’s board, which is interesting considering that Microsoft is also an investor in Facebook. → Read More
Thinking about catching a movie with your loved ones for Father’s Day, or just because its Sunday? Well it’s not going to be on Netflix as their online services including the $7.99 a month streaming feature and the ability to order DVDs are down for some users.
Right now users have been unable to access the website or the streaming features for about three hours and are complaining on (of course) Twitter. Netflix has 23.3 million members in the United States and Canada. → Read More
If you are reading TechCrunch you probably already realize this fact: Flavor-of-the-month consumer Internet companies have a way of hogging the spotlight. If you didn’t, we conveniently published some evidence of it yesterday.
But that reality predates us by at least a decade. In 1999 when the world talked about Silicon Valley, they usually meant sexy dot coms. In 2005 when people were writing headlines about “the return of Silicon Valley,” a lot of people working in technology were justifiably irritated. After all, tech behemoths like eBay, Yahoo, Oracle, Intel, Hewlett-Packard never exactly left.
That focus on the sexy, social, consumer Web over everything else has only gotten more pronounced as those many of those one-time flavors of the month like Facebook, Zynga, Twitter and Groupon have become bonafide giants. The difference is that now the divergence in attention actually makes sense. → Read More
One evening last week we sat at the bar downstairs at 1 Market after a long workday. John Taschek and several others were extolling the virtues, no, the imperatives of motorcycle ownership. You know, the usual keep the motor running head on down the highway testosterone. The kind of stuff Gary Busey still can’t get out of his head no matter how much he resists wearing a helmet. Gary, you’re fired.
But hiding in the camaraderie was a simple truth, that the 15 minute commute into the office on his BMW gives Taschek the time to think. And what we’re going to hear tomorrow is the result of a lot of time to think. And why Microsoft hasn’t figured out how to make that time. → Read More
Netflix CEO and founder Reed Hastings took the stage at All Things Digital’s ninth conference, speaking with Kara Swisher about the company’s future strategy, competition, content deals and more. When asked about whether the company is looking to add more new released, Hastings said that Netflix is actually a complement to platforms that offer new releases.
One of the pain points of using Netflix is that the TV and movie platform doesn’t offer a lot of new releases, the way that iTunes or Hulu does. But Hastings doesn’t seem to be too concerned about this, openly stating that he feels that Netflix can be paired with sites and platforms that offer newer content. He added that he’d like to include prior-season shows from channels like HBO and Showtime. He says his ‘check isn’t big enough for now’ but there are ongoing talks about buying this type of content. Specifically, he says he’d love to add HBO’s ‘The Wire.’ → Read More
Two weeks after Miramax announced a major content deal with Netflix, the studio this morning announced that it has also struck a multi-year agreement with Hulu to bring hundreds of films, including Pulp Fiction, Good Will Hunting, Scream and The English Patient to Hulu Plus subscribers. Hulu will offer select films via the advertising-supported Hulu.com service to boot.
Launching today, Hulu Plus subscribers will be able to watch Miramax movies in HD (when available), with no advertising interruption. → Read More
This guest post was written by Ethan Kurzweil. Kurzweil is a Vice President with Bessemer Venture Partners in Menlo Park, California. He works with Internet companies of all types, including Playdom, Zoosk, Crowdflower, Twilio, adap.tv, Reputation.com, Skybox Imaging, and OpenCandy. You can find him on twitter at @ethankurz. The views expressed in this post are his own, and do not represent those of Bessemer.
Hardly a day goes by anymore when I don’t hear about a reportedly “radical, new” business concept summarized succinctly as “X” (some well-known existing business) for “Y” (some specific market segment, use case, or other qualifier). These descriptors range from the logical – “Groupons for Moms” (okay, clear enough) – to the absurd – “Pandora for Cloud” (huh?). Often, I don’t even understand the analogy, as it’s so obscure, or I have never even heard of the company being compared. Sure, these monikers may satisfy our need for efficiency and brevity, but I’m convinced that in the long-run, we need to expand our collective attention spans just long enough to really describe what our businesses do. Otherwise, we run the risk of setting a model for entrepreneurship that’s entirely devoid of creativity and true innovation. → Read More
Streaming media is the future. You know this if you’ve used Netflix, Rdio, Grooveshark or any of the other popular music services. Apple is said to be getting into the game as well and a recently-released patent application from 2009 shows iTunes streaming will in fact offer something different from the rest of the players.
As much as I love Rdio, and I do love Rdio, I can’t always guarantee that the mobile app will start playing music when I press play. There’s always this waiting game as my Droid X fights for enough Verizon bandwidth to start streaming. Once the little blue bar partially fills up, signifying that there’s enough of a buffer for seamless playback, the song starts. This is where Apple will offer something better and different. → Read More
Netflix video streaming is now the single largest source of peak downstream Interent traffic i the U.S., according to a new report by Sandvine. The streaming video service now accounts for 29.7 percent of peak downstream traffic, up from 21 percent last fall.
That puts Netflix above HTTP websites (18 percent), BitTorrent (11 percent), and YouTube (10 percent) as a source of downstream traffic during peak times in North America. (BitTorrent still accounts for half of all upstream traffic). As whole, “real-time entertainment” (which is mostly video streaming, but also includes streaming music) accounted for 49 percent of downstream traffic in March, 2011, versus 19 percent for P2P file sharing, and 17 percent for Web browsing. → Read More
Netflix and its customers saw a big win today, as movies like Clerks, Cold Mountain, and Good Will Hunting will soon enough make their way into Netflix’s Watch Instantly portfolio. The movie streaming service is jumping into bed with Miramax, and it seems to be getting pretty serious, as the couple signed a multi-year agreement allowing the streaming of movies from Miramax’s library of films. → Read More
Netflix is leading the charge when it comes to streaming movies and TV shows over the Internet. It’s no longer focussed on DVDs, even though it is about to ship its 3 billionth disc. As bandwidth to the home increases, streaming will just continue to become more popular. At the Wired business conference earlier this week, Netflix CEO Reed Hastings predicted that gigabit-per-second speeds to the home will become common over the next decade.
I caught up with Hastings just before he went onstage and shot the video interview above (in which he does a mean impression of a 56K dial-up modem to illustrate how far we’ve come). “Streaming is the core of our business and it is growing rapidly.” he told me. “Streaming is much bigger than DVD for us in terms of hours of viewing, growth, and focus. We are seeing massive consumer adoption of streaming.” Not only that, but DVD growth might have peaked. Off camera, Hastings told me that DVD shipments for Netflix “this quarter may go the down first time ever.” → Read More
